News
The U.S. Dollar’s Global Dominance is at Risk
Aug
COIN MARKET INSIDER • VOLUME 33 • ISSUE 39
The U.S. dollar’s global dominance is at risk…
The policies of the Biden administration are undermining the strength of the U.S. dollar and jeopardizing America’s worldwide influence.
Economists expressed concern regarding the possible consequences of Biden’s policies, highlighting the threat to the U.S. dollar’s global reserve currency status.
Losing reserve currency status would mean 70 years of deficits flooding back to the U.S., all competing with existing dollars held domestically to buy goods and services.
E.J. Antoni, Heritage Foundation economist, told the DCNF. “That’s a hyperinflation scenario. It also means we could no longer export inflation abroad, so we’d bear the full cost of future inflation ourselves.”
A Chart Breakdown of the U.S. Dollar Index
A chart breakdown of the U.S. Dollar Index is signaling that further losses loom.
The chart breakdown suggests the U.S. dollar may become less attractive to the rest of the world. Tame inflation data and worries about a recession are making the dollar less attractive to investors.
The U.S. Dollar Index chart signals that further losses are ahead.
The greatest threat to the value and status of the US dollar comes from our policymakers’ own fiscal malfeasance, which has been ongoing for decades, but which is accelerating.
This is a classic supply/demand equation. The US government cannot continue to spend dollars by the trillions and thus increase the supply of dollars splashing around the world, without there being an impact on the value of those dollars.
The federal government’s deficit nearly tripled in the first nine months of the fiscal year.
A surge that’s bound to raise concerns about the country’s rising debt levels.
The Treasury Department said Thursday that the budget gap from October through June was nearly $1.4 trillion — a 170% increase from the same period a year earlier. The federal government operates under a fiscal year that begins October 1.
The dollar is also under assault from abroad, largely from China, and now the International Monetary Fund is facilitating that Chinese assault.
The International Monetary Fund (IMF) has hinted that it may accept the Chinese Yuan as a currency for countries to settle their obligations with the IMF following Argentina’s recent debt repayment in yuan.
IMF spokesperson Julie Kozack confirmed on Thursday that Argentina had paid off part of its debts equivalent to $1.1 billion of the $2.7 billion that matured last month, with the IMF in Chinese currency.
Now that the dollar is weakening, gold seems to be set free.
Gold has turned in solid but unspectacular performance over the past few years. The primary factor that held gold back during that period was the strong US dollar. Much of that strength was due to unique factors during the pandemic.
Gold is a leading beneficiary of the decline in the dollar and thus is an excellent means of protection, but of course not all forms of gold are equal.
Rare gold coins offer privacy advantages due to their status as collectibles.
Rare gold coins also offer potential performance advantages by virtue of their true scarcity…by which investors can hedge their wealth against a long-term decline in the dollar.
Gold prices settled at their highest level in six weeks, as weakness in the U.S. dollar and lower Treasury yields helped keep prices of precious metals and commodities elevated.
Recent gains for the precious metal have been triggered by the U.S. dollar falling sharply last week amid expectations that the Federal Reserve is close to reaching the end of its rate-hiking cycle after both CPI and PPI measures of inflation came in weaker than expected.
